Process to ensure faster I-T refunds in more cities
August, 25th 2008
The Central Board of Direct Taxes (CBDT) has initiated dialogue with public sector banks (PSBs) to rope them in as refund bankers as part of its attempt to put in place a quicker and transparent income-tax refund process across the country.
Refund Banker is a scheme wherein a scheduled bank is authorised to issue refund instruments, either in paper form or electronically, on behalf of the Income-Tax department.
Under this scheme, assessees benefit from faster tax refunds and direct credit into their bank accounts on the lines of dividend payments made by corporates to shareholders.
State Bank of India (SBI) is already operating as the Refund Bank for the Income-Tax department in Delhi, Patna, Chennai, Mumbai, Kolkata and Bangalore.
Roping in more bankers
Official sources said that bringing in more banks could improve the efficiency of the entire process and also help expand the services to more cities.
The CBDT wants to better the turnaround time for the entire process and hence is looking to bring in more banks.
The refund banker scheme can become more effective if more and more taxpayers opt for direct credit of refund to their bank account through Electronic Clearing Service (ECS), which is accurate, efficient and cost-effective, a CBDT spokesperson told BusinessLine.
The CBDT official, however, noted that only one-third of the taxpayers getting refunds through the refund banker scheme receive direct credit and the remaining two-thirds get refunds by cheque from the refund banker.
A large number of taxpayers in these six cities have not still opted for the direct credit option.
So far, about 4.2 lakh refunds for about Rs 540 crore had been issued during 2007-08.
The tax department had in all issued about 48 lakh refunds during 2007-08.
Another feature of the refund banker scheme was that the department does not do any pre-funding of the refund amount. SBI is now disbursing the amount before claiming it from the Government.
A CBDT official said that almost 98 per cent of the grievances relating to refunds arise from non-corporate (individuals) assessees.